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Who needs a GIG? The Gigabit Hotel

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June 12, 2015
Trevor Warner - trevorwarner@warnerconsultinggroup.com

Bandwidth. It was once asked how much bandwidth do you need and the answer came quickly with no prejudice or delay; as much as you can afford. That answer has not changed in the last 10 years. While hotel brands race to keep guest network (HSIA) standards current with guest demands, bandwidth continues to be a constant dance with price, necessity, availability and expandability. Throw in a very complicated dance partner from the FCC, Net neutrality, along with the second wave of significant bandwidth demand and it’s a situation where a hotel will not find success…with one exception, the ultimate dance partner now on display as the first Gigabit hotel.

Using Google, Net neutrality is defined as the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment or mode of communication. The term was coined by Columbia University media law professor Tim Wu in 2003. 

The definition is generic and the outcome has not provided the results the FCC wanted to see. At Comptel 2015, Milo Medin, the vice president for access services at Google, spoke to the audience in favor of the principle Net neutrality was based upon but not the outcome. “No consumers are seeing higher speeds than before the order was passed; no consumers are paying less for their Internet services than what they were paying for; no consumers are seeing higher volume caps than they had before; and no consumers have additional choice of providers than they had before,” Medin said. “The openness of the Internet may have been preserved, which is really important, but the Internet options consumers can choose from have not changed and will not change because of what was passed in that order.”1

Let’s step away from Net neutrality. Guest bandwidth demands have hit the second wave and we are seeing a spike in bandwidth usage. While bandwidth prices continue to drop, the demand is outpacing the cost reduction so hotels are absorbing increased costs. Hotel brands, afraid to lose market share to competitors, have unilaterally started to give away Internet for free. Every brand has its variation but from an owners’ perspective, we have higher costs to provide guest Internet with lower to no offsetting revenue. 

The additional complication is cloud services. As our networks continue to evolve we find more and more back office services being lifted to the cloud. The burden on bandwidth to perform now not only includes the guests, but also the ability to function as a business, as primary services including reservations, finances, HR, CRM, and so on are moved to off-site, cloud-based services and servers.
Net neutrality provides a significant layer to this already increasing cost by essentially eliminating all carrier quality of service (QOS).  No more traffic shaping, prioritization of data, and, in principle, they must provide a dumb pipe giving equal access to all types of traffic. Because the definition is so generic we don’t know what the final outcome will be as FCC mandate gets massaged, adapted and significantly changed to meet the real world reality. While Net neutrality is meant to spark competition, most carriers have used QOS to provide a more efficient flow of data.  If they can’t stay efficient, there is concern that costs they incur to provide unfiltered access will go up. Not too many carriers will eat the cost but instead pass this cost to the consumer. 

One of the primary concerns for hotels is that the FCC conversation is shifting for businesses who provide public Wi-Fi, and these businesses would be required to follow the same rules as carriers. If this were to happen, while we believe we could still cap the user, hotel owners and operators could not use the tools available to us to make bandwidth utilization more efficient and thus we would need even more bandwidth to satisfy guests’ demands. For now, we have to plan for an even greater burden on our networks.
To the earlier point made by Google vice president of access services, Milo Medin, product options, as slow as they are to develop, may be one solution. Google made this leap with a technology-changing product and the introduction of GoogleFiber in Kansas City. Unlike anything the industry had seen, Google built out and is providing services as high as 1 GIG to residential customers. The product and service is exactly what Medin wants to see when combined with Net neutrality. If you have so much bandwidth available to you, then you don’t need QOS. 

In reaction to Google’s offering, CenturyLink developed GPON (Gigabit Passive Optical Network). Omaha is a CenturyLink territory through the acquisition of Qwest (which was one of the largest fiber network providers). Whether CenturyLink reacted or was planning to develop and sell the service to residential customers, Google clearly accelerated the deployment.  The difference though is that CenturyLink already has fiber networks and can then roll out a deployment as planned in 35 cities. More importantly, CenturyLink has a greater footprint in the urban locations. 

Meet Jeffrey Stephen Parker, vice president of IT for Stout Street Hospitality and Magnolia Hotels, which operates the Magnolia Denver, the first Gigabit hotel in Denver. CenturyLink GPON was introduced in late 2014 to the Denver market and the Magnolia Denver quickly jumped at the chance to add the product to meet guest demands. Parker said, “Magnolia Hotels are always looking for opportunities to improve guest satisfaction and reduce costs, GPON gives us the ability to satisfy our clients’ desire for more, higher quality, Internet speed, and reduce the operational expense to the hotel.”

GPON is a dramatic game changer in the future of Internet and specifically how hotels make buying decisions.  First consider the product: a full GIG of Internet with a service level agreement that meets the requirements of the industry. Who needs a GIG? Nobody right now, but with the changes coming it’s an opportunity to be ahead of the curve. Companies tend to focus on the business side of technology which leads us to the most important second point about GPON, which is price. GPON is significantly less expensive than the other technology available to us in the industry. For the same price that a hotel would pay for 50 MB of traditional fiber bandwidth in the Denver market, the Magnolia Denver installed 1 GIG. It was less expensive than any bandwidth over 100 MB. Routinely even limited service hotels are installing 100 MB and greater circuits. In some cases hotels are relying on burstable circuits to keep up with the demands from the network. With GPON, the hotel pays significantly less money for 10 times the bandwidth. 

Aside from the cost to bandwidth ratio, consider the benefit to the sales group. In an effort to differentiate the Magnolia Denver from its competition, it now can sell unmatched speeds competing both locally and nationwide against larger, more established hotels. “We are excited that we can now offer an individual guest the ability to have bandwidth similar to what they experience at home, on the fly; and our abilities to offer premium bandwidth to our meetings is a key to our future success,” Parker said.

Gigabit service is growing at a tremendous pace. Community-owned FTTP networks such as EPB Fiber of Chattanooga, Tenn., is a high-profile, well-chronicled fiber gigabit project. Other such as Wilson, N.C., Bristol, Va., and Lafayette, La., are rolling out. There are more than 40 communities with gigabit service and more than 400 communities with projects in the works. 

With the evolution of Net neutrality looming, given the complexity that our networks face now and the societal trend of on-demand content including entertainment, business, and personal lifestyle, the evolution of the Gigabit service is welcomed. Keep your eyes open for gigabit service available to your property. It’s a game changer. 

Trevor Warner is the president of Warner Consulting Group. He can be reached at trevorwarner@warnerconsultinggroup.com.

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